Preface

The banking and finance industry plays a significant role in the economy of a nation. As such, it demands continuous research and up-to-date feeds for it to stay competitive and resilient. Due to its revolving and dynamic nature as well as its significance and interlinkages with other industries, a well-functioning banking and finance system is vital in safeguarding the interest of all stakeholders. The hard lessons and experiences learned from the financial crises of 1997/1998 and 2008/2009, as well as the recent COVID-19 pandemic, have instigated extensive postmortems and re-evaluations of the banking and financial system among related players in the field to improve and perhaps share and adopt best practices of every aspect in the industry.

Realizing the significant impacts of this industry, this book, Banking and Finance, highlights major issues related to banking and finance and puts forth recent empirical evidence, scientific research, best practices, and recommendations. This book discusses all major areas of banking and finance. With the wide range of topics highlighted and discussed, together with recent scientific research and findings using advanced econometrical approaches, this book not only enriches the literature but also offers policy implications that will benefit all players including academicians and practitioners in the field of banking and finance.

The book contains sixteen chapters by thirty-one authors divided into two sections. The first section discusses banking while the second covers finance.

In the banking section, Aysa Siddika and Razali Haron provide a concise overview of capital adequacy regulation and the importance and evolution of regulation. They further explain how several banking crises and banks' defaults motivated the Basel Committee on Banking Supervision (BCBS) to provide a comprehensive guideline in managing bank capital.

Ellis Kofi Akwaa-Sekyi explores a qualitative self-regulation approach to address a major risk facing banks using the BCBS framework of internal controls. The chapter specifically examines the effect of the qualitative principles of the BCBS internal control framework on credit risk covering banks from selected EU countries. The author provides evidence on the significant relationship between board functions and activities, board structure and board monitoring, and credit risk and concludes that investment in high-risk assets, bank profitability, and the board chair being a former CEO increases credit risk in European banking.

Naji Mansour Nomran and Razali Haron examine the impact of governance mechanisms on the performance of Islamic banks (IBs) in eighteen countries during the financial crisis of 2008. The study provides justifications on Shariah Supervisory Board effectiveness in improving IBs' performance even during the crisis periods. They conclude on the importance of IBs to adopt appropriate governance structures to sustain future performance.

Dimas Bagus Wiranatakusuma, Imamuddin Yuliadi, and Ikhwan Victhori analyze the risk of IBs in Indonesia and identify the most dominant risk that could trigger other risks. Their study suggests that financing risk is the most dominant risk triggering vulnerability in Indonesian IBs.

Oluwaseun James Oguntuase examines climate change and the associated uncertainties, acknowledging it as one of the greatest global challenges to the governance of the global socioeconomic and financial system. The author demonstrates the triangular relationship between the three notions of climaterelated risks, credit risk, and financial stability by enumerating the channels through which climate risks can cause credit risk and affect the stability of the financial system.

Taslima Julia and Salina Kassim study green banking and the impact it has on sustainable development goals (SDGs) and its relationship with the objective of Islamic law. The authors argue that banks can contribute enormously to restore environmental balance and to preserve a livable condition for future generations through green banking. They further establish that green banking, SDGs, and the objective of Islamic law are complementary to each other.

Wooi Keong Yong and Wooi Meng Yong discuss the impact of recent local political development Brexit and the trade war between the United States and China on the banking sector of Malaysia. The chapter concludes that the global economic events of Brexit and the US–China trade war in the last few years along with the unanticipated COVID-19 pandemic coupled with the political uncertainty domestically poses great credit risk to Malaysian banks.

Naima Andleeb, Md Fauzi Ahmad, and Shahab Aziz explore the importance of knowledge sharing in banking management along with the organizational culture. The chapter proposes a framework in which knowledge sharing is expected to be influenced by the organizational culture of banks. The authors explain that organizational culture itself is comprised of uncertainty avoidance, performance orientation, and gender egalitarianism.

Akinbode James Olalekan discusses the progress of bank service delivery in Nigeria. The country has recorded significant efficiency in bank service delivery via the effective use of an electronic banking system. Despite progress, some improvement is still required in employees' knowledge gaps, technology, legal framework, labor, and attitude. The improvement in these critical aspects is imperative for further improvement of banking service delivery in the country.

Moving on to the finance section, Wojciech Grabowski analyzes the interlinkages between stock markets in the Central European countries (Czech Republic, Poland, Slovakia, and Hungary; CEE4) and stock markets of Germany and the United States. The chapter divides the study period according to a few important events and identifies three significant breakpoints in variance. Stock markets in the CEE-4 countries turned out to be informationally efficient in three of the four sub-periods. Stock markets in Poland and Hungary were more sensitive to changes in rates of return on the German market.

Maya Puspa Rahman reports that based on past research, a yield curve contains information for future growth and, to a certain extent, was accurate in predicting recessions through the signal of yield curve inversion. In line with this argument,

**V**

the chapter provides new evidence on the long- and short-run relationship between economic growth and yield spread in Malaysia, based on a twenty-year span of data divided according to sample periods. The study finds strong evidence of co-integration between the yield spread and growth, concurring on the long-run

Mehmet Selman Çolak, İbrahim Ethem Güney, and Yavuz Selim Hacıhasanoğlu study the relationship between economic uncertainty and balance sheet strength of non-financial firms quoted in Borsa İstanbul. To measure the balance sheet strength, the authors make use of a multivariate indicator (MFA score), which is a composite index to gauge the credit risk of the firms. MFA scores are then compared with some uncertainty indicators for the study period. The chapter concludes that when the uncertainties in global or Turkish economy are high, a significant causal relationship is observed from uncertainty indicators to firms' balance sheet strength. More specifically, economic uncertainties negatively affect firms' balance

Teimuraz Tsabadze proposes a new approach for the assessment of credit risk. The chapter first discusses the existing models of credit risk assessment and justifies the need for a new approach. Fuzzy mathematics is employed since the new approach is created for conditions of uncertainty. The proposed approach is based on group decision-making, where experts' opinions are expressed by trapezoidal fuzzy numbers. The theoretical basis of the proposed approach is laid out in the metric space of trapezoidal fuzzy numbers, and two realization algorithms are given.

Hongwei Wang and Shiqin Chen highlight the common problem of sparse data for crowdfunding recommendations. They argue collaborative filtering (CF) performs poorly in the case of sparse data like Kickstarter. Considering this limitation, they propose a method of enabling indirect crowdfunding campaign recommendations based on a bipartite graph. Experimental results show that the bipartite graphbased CF achieves better performance in the recommendation for the extremely

Rosa Adamo, Domenica Federico, Mariantonietta Intonti, Simona Mele, and Antonella Notte analyze the characteristics of a crowdfunding platform operating on the Italian market (Produzioni dal Basso), highlighting its characteristics, strengths, and weaknesses. Italy is unique as crowdfunding was introduced for the first time in Europe. The study also carries out a simulation for the realization of a crowdfunding project by an Italian foundation operating in the social sector of child

and adolescent distress, implemented through the use of the same platform.

The book ends with a legal discourse on sales and conformity of goods and its importance to economic development. Djieufack Roland adopts an in-depth analysis on the matter and embraces that conformity of goods can conveniently be addressed from a number of different angles: contract law, consumer patterns, local and international standards, and the principles of caveat venditor and caveat emptor. The author explains that the concept of conformity is dynamic and amorphous as it is recognized as an impetus to economic development and plays a

It was indeed a great experience editing this book, which is filled with knowledge from various perspectives. It is truly an eye opener to what is happening in the field of banking and finance all over the world regardless of the economic landscapes.

major role in matters of sales of goods within an economy.

and short-run dynamics between them.

sheet performance in such an environment.

sparse data from crowdfunding campaigns.

the chapter provides new evidence on the long- and short-run relationship between economic growth and yield spread in Malaysia, based on a twenty-year span of data divided according to sample periods. The study finds strong evidence of co-integration between the yield spread and growth, concurring on the long-run and short-run dynamics between them.

Mehmet Selman Çolak, İbrahim Ethem Güney, and Yavuz Selim Hacıhasanoğlu study the relationship between economic uncertainty and balance sheet strength of non-financial firms quoted in Borsa İstanbul. To measure the balance sheet strength, the authors make use of a multivariate indicator (MFA score), which is a composite index to gauge the credit risk of the firms. MFA scores are then compared with some uncertainty indicators for the study period. The chapter concludes that when the uncertainties in global or Turkish economy are high, a significant causal relationship is observed from uncertainty indicators to firms' balance sheet strength. More specifically, economic uncertainties negatively affect firms' balance sheet performance in such an environment.

Teimuraz Tsabadze proposes a new approach for the assessment of credit risk. The chapter first discusses the existing models of credit risk assessment and justifies the need for a new approach. Fuzzy mathematics is employed since the new approach is created for conditions of uncertainty. The proposed approach is based on group decision-making, where experts' opinions are expressed by trapezoidal fuzzy numbers. The theoretical basis of the proposed approach is laid out in the metric space of trapezoidal fuzzy numbers, and two realization algorithms are given.

Hongwei Wang and Shiqin Chen highlight the common problem of sparse data for crowdfunding recommendations. They argue collaborative filtering (CF) performs poorly in the case of sparse data like Kickstarter. Considering this limitation, they propose a method of enabling indirect crowdfunding campaign recommendations based on a bipartite graph. Experimental results show that the bipartite graphbased CF achieves better performance in the recommendation for the extremely sparse data from crowdfunding campaigns.

Rosa Adamo, Domenica Federico, Mariantonietta Intonti, Simona Mele, and Antonella Notte analyze the characteristics of a crowdfunding platform operating on the Italian market (Produzioni dal Basso), highlighting its characteristics, strengths, and weaknesses. Italy is unique as crowdfunding was introduced for the first time in Europe. The study also carries out a simulation for the realization of a crowdfunding project by an Italian foundation operating in the social sector of child and adolescent distress, implemented through the use of the same platform.

The book ends with a legal discourse on sales and conformity of goods and its importance to economic development. Djieufack Roland adopts an in-depth analysis on the matter and embraces that conformity of goods can conveniently be addressed from a number of different angles: contract law, consumer patterns, local and international standards, and the principles of caveat venditor and caveat emptor. The author explains that the concept of conformity is dynamic and amorphous as it is recognized as an impetus to economic development and plays a major role in matters of sales of goods within an economy.

It was indeed a great experience editing this book, which is filled with knowledge from various perspectives. It is truly an eye opener to what is happening in the field of banking and finance all over the world regardless of the economic landscapes.

This book would not have been possible without the chapter authors as well as two scientific contributors, Ubaldo Comite and Oguzhan Ozcelebi. We appreciate and acknowledge all who contributed to the success of this book. We also extend thanks to Anja Filipovic and Mateo Pulko of IntechOpen who guided us through the process of compiling and editing this book to its completion.
